Ann Joo down 2.42% on earnings downgrade

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KUALA LUMPUR (July 23): Ann Joo Resources Bhd shares fell 2.42% at mid-morning today after AmInvestment Research maintained its “Hold” rating on the stock at RM2.07 with a lower fair value of RM2.17 (from RM2.70).

At 10.23am, Ann Joo fell 5 sen to RM2.02 with 153,400 shares done.

AmInvestment Research in a note today said it cut its FY18-20F net profit forecasts by 11%, 13% and 31% respectively and said its new fair value is based on 8x revised FY20F FD EPS of 27.1sen.

“We use FY20F (instead of FY19F) as our valuation base year to reflect the potential earnings downturn in FY20F with the completion of major mega infrastructure projects in about two years from now.

“The downgrade in our FY18F earnings forecast is to reflect an expected soft 2QFY18 (April–June) as contractors held back from steel purchases on the heels of the surprise 14th general election outcome that threw various public infrastructure projects into limbo,” it said.

AmInvestment Research also lowered its outlook for sales volumes and prices in FY19-20F.

“We now assume FY18-20F sales volume growth of 0% to 2.5% per annum (from 3% previously) and average steel selling prices of RM2,465-2,565/tonne (from RM2,500-2,700/tonne previously),” it said.